Citing client cutbacks and a below-average attrition rate, Leo Burnett Co. laid off 52 employees on Friday, its first major wholesale cutback since 1983.
Jim Oates, chairman and regional managing director of Leo Burnett U.S.A. said the reductions, 2.2% of its total staff, were 'across the board at all different levels.' Although Oates wouldn't give specific titles, the effects of the cutbacks were felt as high up as the senior vp level, one source said.
'The economics continue to be not fairly progressive,' Oates said in an interview on Friday. 'With client marketing staff cutbacks, budget tightening, and us getting smarter about our business, it was time to make adjustments.'
Oates denied Philip Morris's recent announcement on price cuts on Marlboro, one of Burnett's most profitable accounts, was one of the reasons for the cut. He said ad plans for Marlboro are pretty aggressive in the coming months.
But client spending has fallen off dramatically on a number of other of Burnett's normally blue-chip and solid client base. Kraft General Foods, United Airlines, Heinz U.S.A. and Oldsmobile have all cut budgets during the past couple of years. While the agency's growth overseas has expanded at a double-digit rate during the past few years, its domestic billings growth has slowed to a crawl.
The cut came at the end of a busy week when ironically Burnett announced an expansive client service organization for its Oldsmobile client. Burnett announced a new account structure that breaks down the management of the account into four distinct groups, and may be a model for some of the agency's other major clients.
Four key client service groups will oversee the business and will include devoting a team to the client's 'future,' a new group that Burnett is already considering using on other clients such as McDonald's Corp., according to executive vp/director of client services, James Thompson.
Thompson takes over for Tom Jordan, who was based in the company's now-shuttered Southfield, Mich., service office. The other teams devoted to Olds include Olds car lines; retail marketing; and dealer marketing.
Copyright Adweek L.P. (1993)